The Daily Circuit: Kuwait cautions on private equity + Acwa Power raises $1.9B

👋 Hello from the Middle East!

In the Daily Circuit today, we’re reporting on Morocco’s $14 billion infrastructure deal with the UAE’s Taqa energy company, a $1.9 billion rights issue by Saudi Arabia’s Acwa Power, Oman’s new smart city projects and the launch of Abu Dhabi’s new Falcon Arabic-language AI model. But first, Day 2 at the Qatar Investment Forum.

Amid the influx of private equity firms to the Gulf’s financial capitals, the head of Kuwait’s $1 trillion sovereign wealth fund says the industry must be handled with caution.

Speaking at the Qatar Economic Forum in Doha today, Sheikh Saoud Salem Al-Sabah, Managing Director of the Kuwait Investment Authority warned that some international money management firms are struggling to return money to investors because of inflated valuations.

“Private equity is very troubled, I believe, especially in the large buyouts, venture capital and the rise of continuation vehicles,” Sheikh Saoud said in a panel discussion on the second day of the three-day conference. “That’s a very worrying sign.”

The KIA is the second largest sovereign wealth fund in the Gulf, trailing the Abu Dhabi Investment Authority and slightly ahead of Saudi Arabia’s Public Investment Fund. The region’s six biggest funds oversee assets of about $4 trillion, and many of them have historically been significant backers of private equity firms, according to Bloomberg, the chief media partner for the annual Doha summit, which is underwritten by the Qatari government.

Also speaking at the conference today was Steven Mnuchin, the former U.S. Treasury Secretary and present Managing Partner of Liberty Strategic Capital, who counseled patience in trade negotiations with China. “If the U.S. can level the playing field and get better access for the country’s businesses in China, the opportunity is massive,” he said.

Days after U.S. President Donald Trump returned to Washington from a trip that took him to Saudi Arabia, Qatar and the UAE, his son Donald Trump Jr. appeared at the Doha conference and said The Trump Organization won’t “do direct deals” with foreign government entities.

While his father has been criticized for entertaining an offer from the government of Qatar to receive a $400 million Boeing 747 plane as a gift, the younger Trump said the family business is being cautious about its foreign business.  “We’re going to play by the rules and it’s as simple as that,” he said.

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CIRCUIT Q&A

CruiseXplore builds Mideast business with  mini-holidays to Gulf, Red Sea resorts

While cruise ships teem with Middle East travelers heading to the Greek Islands, Hong Kong and the Caribbean, Lakshmi Durai is trying to introduce more people to shorter luxury trips sailing between the Gulf states and along the Red Sea, The Circuit’s Omnia Al Desoukie reports.

As founder and CEO of CruiseXplore, an internet booking platform that fills cabins for some two dozen cruise lines, including Carnival, Norwegian and Disney, Durai has lately teamed up on the mini-holidays with Aroya Cruises, which is backed by Saudi Arabia’s Public Investment Fund.

“This is a very high-potential market,” Durai, a 30-year veteran of the industry, told The Circuit during this month’s annual Arabian Travel Market exhibition in Dubai. “It’s an easy way for people to experience cruising for the first time.”

Click here to read the full interview.

📷 Photo of the Day

ADIA ramps up investments in India as UAE leverages ties

From energy, infrastructure and pharmaceuticals to iconic snack brands and baby products, the Abu Dhabi Investment Authority has been pumping funds into India over the past six months.

Across five deals with Indian businesses, the sovereign wealth fund invested $1 billion during the first half of 2024 as the UAE pushes to increase non-oil bilateral trade with its second-largest trading partner.

India is becoming a magnet for sovereign investment amid growing geopolitical and economic uncertainty elsewhere.

Last month UAE Minister of Economy Abdullah bin Touq led a trade delegation of Emirati business leaders and government officials to the world’s most populous nation.

It followed reciprocal visits by UAE President Sheikh Mohamed bin Zayed and Indian Prime Minister Narendra Modi.

ADIA has been able to leverage relationships with India’s biggest conglomerates, including Mukesh Ambani’s Reliance Industries and Gautam Adani’s Adani Group, to grow its presence.

The fund has been named among likely investors, alongside Abu Dhabi’s International Holding Co., in an upcoming $1 billion stock offering for Adani Energy.

Among the non-oil deals under pursuit, ADIA is a part of a consortium led by Blackstone which is attempting to acquire a majority stake in snack giant Haldiram in a deal worth $4.8 billion. If successful, the purchase is likely to be the largest private equity buyout in India to date.

The fund is also being sounded out by the Indian government to buy its stake in Vodafone Idea.

NT-Tao seeks to generate nuclear fusion with compact reactors

HOD HASHARON, Israel — Creating a miniature version of the sun in a nondescript office building outside Tel Aviv might be the key to providing cheap, waste-free energy for the entire world.
 
NT-Tao, an Israeli startup led by a former submarine commander, is one of some 30 companies racing to generate energy through nuclear fusion. Its founders are trying to develop fusion reactors small enough to fit in a 40-foot shipping container, but powerful enough that each could provide electricity for 1,000 homes.

After raising $22 million in February from Japan’s Honda Motor Co. and other investors, NT-Tao is looking to grab a modest chunk of what some predict could become a $40 trillion fusion industry. Leaders in the field include Cambridge, Mass.-based Commonwealth Fusion Systems, which is backed by billionaire Bill Gates, and Seattle, -based Helion Energy, which counts Sam Altman, CEO of artificial intelligence pioneer OpenAI, as an investor.

“Fusion energy is really the only abundant source of energy that is clean, and you can get as much as you need,” said CEO Oded Gour-Lavie, who co-founded NT-Tao in 2016 after serving 30 years in the Israeli navy. “There’s nothing coming close to it.” 

One problem: the technology doesn’t quite exist yet. 

When hydrogen gets heated under pressure to around 100 million Celsius, about six times hotter than the sun – even for a fraction of a second – it becomes so hot that the electrons are sheared from the atoms and the nuclei collide with one another. When two nuclei meet and fuse together, an enormous amount of energy is released. Finding a way to capture the energy generated by that fusion could go a long way towards solving the current energy crisis.

At the NT-Tao lab in the Tel Aviv suburb of Hod Hasharon, the hydrogen is heated into plasma, the fourth state of matter after solid, liquid, and gas, which is generated when temperatures exceed 2,700 C. Because temperatures will eventually approach millions of degrees Celsius in the fusion reactor, the plasma must be suspended in space inside a doughnut-shaped experimental tube. Super-powerful copper magnets hold the plasma, which flows in a circle without touching the sides. Plasma makes up 99% of the sun and Gour-Lavie says the process is like creating a miniature sun.

Fusion will be one of the prominent topics at COP28, the United Nations Climate Change Conference, which starts Nov. 30 and will be hosted by the United Arab Emirates. The conference’s president-designate, Sultan Al Jaber, who is also CEO of the Abu Dhabi National Oil Company, spoke at a climate conference in the UAE last month about the “need to keep pushing for breakthroughs in battery storage, expand nuclear, and invest in new energies like fusion.”

The theories underpinning nuclear fusion have been around since the 1940s, but no one has been able to make it work on a significant scale. Last December, the National Ignition Facility in Livermore, Calif., achieved a breakthrough. The experiment set up 192 lasers that were trained on a tiny bit of frozen hydrogen the size of a peppercorn. The combined force of the laser beams created an output of energy that was slightly higher than the input, generating enough excess to boil about two liters of water.  

Stoked by the success, investment firms are pouring more money into the nascent fusion industry, which has already captured some $5 billion in VC funding. The U.S. government has invested about $700 million a year in fusion research since the 1950s. NT-Tao started an affiliation in May with Princeton University and the Princeton Plasma Physics Laboratory, a U.S. Department of Energy facility at the New Jersey campus. It also collaborates with scientists in Israel, the U.K. and Japan.

Nuclear energy used today is generated through fission, which captures the energy that is released when two atoms split. Fission is the technology that produced the atomic bomb that the U.S. dropped on Hiroshima on Aug. 6, 1945. As a nuclear energy source, the downsides of fission include the history of disasters such as the 1986 Chernobyl explosion, the challenge of radioactive waste disposal and the high cost of building a nuclear plant.

“Our vision is really to democratize clean energy worldwide,” said Gour-Lavie, who founded the company with chief scientist Doron Weinfeld and chief technology officer Boaz Weinfeld, who are brothers. NT-Tao’s compact reactors could be distributed in undeveloped areas where a regional power grid doesn’t reach, or to disaster zones where the grid has collapsed. 

Nuclear fusion requires hydrogen, which is accessible in seawater, and a small amount of lithium, which can be mined from deposits across the world.There are no waste products and little danger of explosion, because the moment the plasma stops being heated, the nuclear reaction stops.

NT-Tao is using a hybrid model between two existing technologies for nuclear fusion, the doughnut-shaped Tokamak, a Russian invention from 1958, and the Stellarator, which creates a twisting, circular path for plasma to circulate within a doughnut shape. The company’s name derives from the equation for creating the fusion reaction, where N means density, T means temperature, and Tao is the time that the atoms are confined.

While the company doesn’t expect to have a commercial product until the 2030s, Gour-Lavie, who commanded submarines in the navy, is confident it is on the right path. Shinji Aoyama, senior managing executive officer of Honda, said in February that the company has “high expectations” for NT-Tao. “Honda believes that fusion energy technology will be a breakthrough technology for affordable, stable, clean energy, and we envision this technology will become increasingly important as electrified vehicles become more popular,” he said.

Other experts are intrigued, but wary of attempting to commercialize technology that doesn’t exist yet. “Definitely, there’s potential, and this is why governments and humanity in general are interested in this kind of energy,” said Erez Gilad, a professor of reactor physics who chairs the department of nuclear engineering at Ben-Gurion University in Beersheva, Israel. “However, the way to produce energy from this kind of nuclear reaction, with fusion, is a very long way away,” he said. “We have several major problems to solve before we even start thinking about the application and the engineering challenges of harnessing this kind of energy to produce electricity to the grid and to charge our electrical vehicles.”

According to a survey from the Fusion Industry Association, the first fusion power plants are expected to come online between 2035 and 2050, and will require a $7 billion supply chain. Most attempts are much larger than NT-Tao’s shipping container approach. The ITER Tokamak, a $24 billion, 35-nation experiment in southern France, has been building a 23,000-ton machine since 2010, though it has been troubled by ballooning costs and delays. 

Energy is “at the heart of most of the things that you need to solve,” Gour-Lavie said. “If we make this happen, we can have abundant energy with almost zero waste and it will be relatively cheap. Really, this is about energy being democratized. Nobody sits on the mine of this material. This is in the oceans. Everyone can get this material.”